ECON 1020 Lecture Notes - Lecture 17: Unemployment Benefits

• School: University of Manitoba
• Department: Economics
• Course: ECON 1020
• Professor: Ryan A.Compton

Document Summary

Avoid multiple counting by measuring and accumulating only the value added at each stage. Value added: the value of the product sold by a firm, less the value of the products purchased and used by the firm to product the product. At each stage, the different between what a firm pays for inputs and what it receives from selling the product made from those inputs is paid out as wages, rent, interest, and profit. Nonproduction transactions must be excluded from gdp because they have nothing to do with the production of final goods. Public transfer payments: the social insurance payments that the government makes directly to households. Since the recipients contribute nothing to current production in return, including such payments in gdp would overstate the year"s output. Private transfer payments: money parents give to children, cash gifts for the holidays. They produce no output, they simply transfer funds from one individual to another and consequently do not enter into.